It’s that fun time, time to call the credit card company and tell them you want to cancel. That is five minutes of your life you will never get back, but you don’t want to pay the annual fee. Your talking to the phone rep as they read from the script, “I must warn you that by cancelling your card today you will forfeit any unused points in your account”. Is that really true?
Before you call to cancel your card, you should read this write-up about annual fees and how you can avoid paying them. If you decide that you do want to cancel a card (and you have read how that may affect your credit) then it is important to know if the miles/points are yours to keep.
There are three main travel card categories we will discuss; airline, hotel, and rewards. The airline and hotel credit cards are what we call “co-branded”. That means these cards offer points for a travel company (IE: Southwest Airlines), but is backed by a different company (Chase). The same thing applies for the Hilton card that is backed by Citi Bank. Now, for reward cards – like the Chase Sapphire card – you earn rewards that are specific to the bank. The Chase Sapphire card is NOT a co-branded card which means you WILL lose the points if you cancel.
Your airline and hotel points are safe if you cancel your credit card. When you earn rewards on your co-branded credit card, they are transferred monthly (usually every time your statement closes) to your loyalty account with the airline or hotel. The bank, who you call when you want to cancel, does not have possession these type of points, the airline/hotel does. The bank cannot touch any points that reside in your loyalty accounts. Now, any pending points that have yet to be deposited into your airline/hotel account are not safe. The day you cancel the card it will kill any pending points that have yet to be transferred over to the airline/hotel.
If you just spent $800 to buy a TV on your co-branded credit card, you would normally get 800 points once the statement closes. If the 800 points had yet to be posted from the bank into your airline/hotel loyalty account (because your statement has yet to close), you won’t ever see them unless you keep the card open. You will want to make sure any rewards you are waiting on have made it over to the airline/hotel before you call to cancel.
Let’s talk about how to save your points on non co-branded cards like the Chase Sapphire and Amex Premier Rewards Gold cards. Again, these sitting points will go bye-bye if you cancel the card without some game planning. The first (and best) option you have to save your points is to TRANSFER them to one of the available travel partners. You can transfer your Amex Membership Rewards to Delta or JetBlue, for example. Your Chase Ultimate Rewards can be transferred to Southwest or Hyatt, likewise. Remember, transferred points to Southwest from Chase Ultimate Rewards DO NOT count towards companion pass. Read which transfers do count towards companion pass.
Another option you have to save your bank “rewards” is to downgrade your card to a no annual fee card. For example, if you don’t want to pay the $195 annual fee on the Amex Premier Rewards Gold card (I don’t blame you), you can downgrade to the no annual fee Blue Everday card. You won’t earn a sign up bonus by switching to the Blue card but you will save your Membership Rewards. Keep in mind, with the Blue card you will no longer be able to transfer your points to travel partners. The only thing you can do with your [now] Blue rewards is to redeem them for gift cards (@ 1 cent) or cover travel purchases (@ .5 cents). Your best bet is to transfer your Membership Rewards to an airline or hotel partner to get the most value. (before you cancel or downgrade)
– Airline and Hotel branded credit cards, like Southwest or Hilton cards, will allow you to keep your points
– Reward cards, like Chase Sapphire, will not let you keep your points but you can transfer them to airlines or credit cards before you cancel.